Bulgaria abandons Belene nuclear plant plans

Wednesday, March 28, 2012

SOFIA, March 28 (Reuters) - Bulgaria has abandoned plans to build the 2,000 megawatt Belene nuclear power plant on the Danube River and will construct a new gas power plant instead, Prime Minister Boiko Borisov said on Wednesday.

The Belene project has failed to attract serious foreign investors in the past three years after Germany's RWE pulled out in 2009 due to funding concerns.

Borisov had repeatedly said in recent weeks the project might not go ahead if it failed to attract Western investors and that a gas power plant might be built instead.

"It was a hard decision to take," Borisov told reporters.

"But we just can't afford to pay the total cost of the project, which will reach some 10 billion euros. And there is no way we can make future generations pay," he added.

Bulgaria, the European Union's poorest country, still plans to pay for a 1,000 MW nuclear reactor, which has already been constructed, and will try to install it at its operational 2,000 MW Kozloduy nuclear plant.

"The Belene nuclear power plant was compromised from the beginning, and such things are not welcomed in the European Union," Borisov said, referring to the fact the location was in a region prone to earthquakes.

"That's why we couldn't find a self-respecting investor to commit to the project," he added.

"I sincerely hope that (Russian Prime Minister) Vladimir Putin will explain to the Duma that we part company on this project as friends and will continue to work together on the Kozloduy nuclear power plant."

The Balkan country has already spent 1.4 billion levs ($948 million) on the project, for which a previous administration had contracted Russia's Atomstroyexport.

The decision to pull out is in line with the centre-right government's stance since 2009, when it put on review major Russian-led energy projects and said it would abandon them if they are not economically viable and do not match the national interest.

OTHER PROJECTS STILL ON

Brussels and Washington have long expressed concerns that a new Russian-made nuclear plant would increase Bulgaria's dependence on Russia, which could use its strength in energy to increase its political influence.

Economy Minister Delyan Dobrev will travel to Moscow on Thursday after Borisov talked with Putin on Monday.

Bulgaria gets over 95 percent of its natural gas from Russia's Gazprom. Its only operational oil refinery, which provides more than 70 percent of the petrol in the country, is fully owned by Russia's LUKOIL.

Bulgaria, meanwhile, has given the South Stream gas pipeline the status of a national project and declared it an object of national importance, providing opportunities for the speedy construction of the project.

The pipeline is intended to carry up to 63 bcm a year of Russian gas across the Black Sea to Greece, from where it will go to central and southern Europe.

"The government is looking for the right balance (in relations with Russia), and we can expect that next step will be to upgrade the pipeline network, with Russia taking a major role in it," Gallup analyst Kancho Stoichev told Reuters.